Success for Bell’s new company

History
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USA, 1887, BROADWAY TELEPHONE LINES

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After obtaining a monopoly position in telephone operations in the US in 1877, the company concentrated its investments on the most lucrative markets in large metropolitan areas , where high subscription rates were charged. During the next 12 months, Bell also established operations in Europe, starting in the United Kingdom and soon activities had also been established in Sweden. In the European market, however, Bell was to be exposed to competition from other companies.

In order to expand outside the US, a new company was established in 1880 called The International Bell Company, with the aim of building up a telephone system outside the US. Meanwhile, the Parent Company was renamed The American Bell Telephone Company.

By the time Bell’s patent in the US expired in 1895, the company had amassed a total of some 300,000 subscribers throughout the country. However, the doors were now opened to intensive competition even in the domestic market. Within the next three years, no less than 6,000 new telephone companies were formed, primarily in rural areas and small towns. Subscription rates were sharply reduced and within ten years, the US had a total of 5 million installed telephones and the Bell companies’ share of the total subscriber base had declined to about 40 percent.

Bell countered the threat presented by these new competitors by implementing a comprehensive change of strategy, electing to focus now on high technical quality, good service to subscribers and, not least, a strong focus on inter-urban telephony. The company quickly succeeded in recapturing a market share, which now totaled about 80 percent.

Substantial resources were invested in research and development, which resulted in a new technology for long-distance telephony, among other advances. On January 25, 1915, the first telephone connection between the eastern and western coasts of America was inaugurated. The initial call was made by Alexander Graham Bell in New York to Thomas Watson, his assistant during the development of the telephone 40 years earlier, who was in San Francisco.